Tag: can student loans be included in chapter 13 bankruptcy

Can you declare bankruptcy on student loans? For the most part the answer to this question is no. As of 1998, student loans can not longer be discharged through bankruptcy. Most laws are written with an exception to the rules in mind and thus, there is a small loophole that can be of assistance in very rare cases.

Part of the balance of student loans can be discharged through bankruptcy if the borrower can prove that repayment of the loans will cause an undue hardship on the borrower. The key here is found in the phrase “provide a minimum standard of living.” This means that if for some reason or reasons the borrower can not provide a minimum standard of living for the borrower and his/her dependents then the student loans may be forgiven through bankruptcy. Because the definition of “minimum standard of living” is a term that is constantly redefined by various government agencies, it becomes important to consult with a legal professional to see if a borrower may meet the criteria needed to use this loophole.

Can student loans be included in chapter 13 bankruptcy

If the borrower is in default of his/her student loans then some hope can sometimes be found by using Chapter 13 of the bankruptcy code.

Chapter 13 can provide a means to clear up defaulted student loans and provide a repayment plan that may ease the struggle to repay loans.

In some cases, Chapter 13 may provide a partial discharge of the student loans. Since Chapter 13 is basically the repayment plan of the bankruptcy code of laws, which protects borrowers from debt collection and would stop collection of student loans.

Chapter 13 differs from Chapter 7 bankruptcy because Chapter 13 can eliminate some debts that Chapter 7 can not discharge. The benefit of Chapter 13 is that it allows the debtor the time to repay debts that can not be discharged. This gives the debtor the means to recover a more meaning financial life without abandoning the debtor to the constant struggle of regaining financial freedom.

Legal representatives can be of further assistance in determining the qualifying factors for financial hardship.